Mediated Agreement Fails When Condition Precedent Fails

In Hernandez v State Automobile, issued last month by the Michigan Court of Appeals, Plaintiff sued her automobile insurance company to get past and future personal-injury benefits. Following a couple of mediation sessions, the parties reached an agreement via emails with the mediator. It included the proviso that the agreement was contingent on the approval of the Michigan Catastrophic Claims Association (MCCA). The document formalizing their agreement was never signed.

The MCCA refused to approve the agreement, because surveillance indicated that the plaintiff was not as injured as she claimed. Defendant retracted the agreement, and plaintiff sued to enforce it. The trial court determined that defendant had waived the condition precedent by continuing its surveillance of the plaintiff after they had reached the agreement; defendant appealed.

The Court of Appeals’ first question was whether the parties had reached an enforceable agreement; the court agreed with the trial court that they had. Refuting the contention that a party must sign an agreement in order for it to be valid, the court noted that the attorneys’ names at the end of their emails satisfied the subscription requirement of MCR 2.507(G), citing Kloian v Domino’s Pizza LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006), a case which did not involve a mediated agreement.

As inked autographs become rarer, the Court has wrestled with the requirement in MCR 2.507(G) that to be enforceable, “evidence of the agreement is in writing, subscribed by the party against whom the agreement is offered or by that party’s attorney.” Do emails count as “in writing”? If so, how does the email meet the requirement that it be “subscribed”? The Kloian case attempted to answer this regarding negotiated settlements, if unartfully, and last summer the court applied it to a mediated agreement, ruling in Amante v Amante, (No. 331542, Court of Appeals unpublished case, June 20, 2017) that an email containing the attorney’s name was not a term of the settlement because the parties were not negotiating the settlement via email, having already reached a mediated agreement. So now Hernandez, while also an unpublished case, signals that email negotiations can result in an enforceable mediated agreement where the key provisions include the attorneys’ names.

The next question was whether the defendant had waived the condition precedent by continuing its surveillance of the plaintiff. The Court of Appeals, reversing the trial court, determined that defendant had done nothing to interfere with the condition precedent, so when the MCCA refused its approval, the agreement became invalid.

In the course of its analysis, the Court reviewed email and phone conversations between the mediator and the attorneys. Apparently no one objected to this. Perhaps the parties agreed in writing to waive confidentiality, a recognized exception under MCR 2.412(D)(1) – but it would’ve been helpful if the court had mentioned that they had done so.